The present invention relates to demand aggregation for goods and services through a dynamic pricing mechanism in which, over an electronic network, such as the Internet, consumers can form buying groups to leverage their buying power and have sellers compete to fulfill their order. Once the bidding cycle has ceased a system for facilitating the sales transaction automatically matches the buyers and sellers based on a variety of factors.
Almost everyone is familiar with these dynamic pricing mechanisms offered by such companies as eBay (www.ebay.com) and uBid (www.ubid.com), where consumers actively place bids, and the final transaction price is the highest price offered at the end of a bidding cycle. More recently, companies such as Priceline (www.priceline.com) and HotWire (www.hotwire.com), allow a single buyer to name the maximum, binding price he is willing to pay, and Priceline or Hotwire then, acting as the seller, either accepts or declines the buyer's binding price. The buyer can never achieve a price less than the binding price he initially offered.
Less familiar to most consumers is the special instance of dynamic volume pricing mechanisms offered by group buying, where discounts are felt when prices fall as a result of the savings a seller can often offer in the presence of many buyers of the same product. Historically, group buying web sites offered by such companies as Mercata (www.mercata.com) and Mobshop (www.mobshop.com) employed a predetermined price change trajectory (i.e., how much and when a discount will be felt is set before the auction cycle begins), that in Mobshop's case was revealed to consumers, while not revealed in the case of Mercata. As the total quantity of the offered product increased during the purchase period, the price paid by each buyer decreased, according to the predetermined price trajectory.
Mercata actually stocked the inventory it offered for sale and ultimately failed because it had to anticipate consumer demand—purchasing and inventorying appropriate levels of merchandise, which proved to be an overwhelming task. Mobshop did not stock merchandise. Instead, Mobshop pre-negotiated volume discount prices with suppliers, and served as an intermediary, asking the suppliers in which pre-negotiated volume discounts had been brokered to fulfill the orders of the buying groups on their website. While Mobshop was able to save on overhead by not stocking inventory, it still had the problem of anticipating demand, and getting suppliers to agree to aggressive pricing, when Mobshop could not guarantee a committed group of consumers. Additionally, neither Mercata nor Mobshop could guarantee the price consumers were receiving was competitive, since sellers were not bidding for the volume sale, but instead a predetermined price trajectory was employed, which ultimately was not designed to maximize the buyer's savings.
What is needed is a system to facilitate the interaction between a group of like-minded consumers with sellers, interested in bulk sales opportunities within the online marketplace, that does not heavily rely on anticipating consumer demand or on predetermined price trajectories. The present invention creates a virtual marketplace via a web-based application that allows buyers to collectively join together, aggregating demand, and allows sellers to actively compete for all, or a portion of, the volume sale. The invention will not rely on its own inventory, but instead act as an exchange, minimizing operating costs and, through social media, the present invention can target existing affinity groups, as well as potential vendors.